House Republicans just released the latest version of the ACA repeal and replace legislation. The good news for many of our clients is that the Congress has listened to you and us as your brokers, consultants, agents and administrators.
Many of us didn't see the wisdom in upsetting the employer-sponsored-healthcare market (150+ million Americans enjoy coverage from their employer) in order to expand the coverage pool for another 40 million Americans. So, the tax exclusion for employer-provided plans remains in place.
Here are Eight Key Provisions of the newly released plans
- Cadillac Tax delayed until 2025. The challenge to repeal the Cadillac Tax will continue. While this plan delays the Cadillac Tax from 2020 to 2025. Most predictions indicate that a significant number of group health plans would trigger the 40% excise tax by 2025 if there aren't any adjustments made to the threshold. [You may recall that the current Cadillac Tax threshold is $10,200 for an individual plan and $27,500 for a family plan]. Last year, more than 2/3 of the House of Representatives supported an end to the Cadillac Tax and 90 Senators voted to repeal the tax too.
- Individual mandate and Employer mandate taxes (penalties) will be eliminated.
- HSAs (Health Savings Accounts) will be expanded. The current proposal would allow for HSAs (coupled with HDHP plans) to permit $6,550 in deposits for an individual and $13,100 in deposits for a family. In short, eligible participants would be allowed to put a full year's Out-of-Pocket Maximum into their HSA each year. ($6,550 and $13,100 are the OOPMaxes for 2017 HDHP-HSA plans)
- This bill includes an advance-able, refundable tax credit to assist those individuals with buying health insurance. Starting at $2,000 per person, a family could qualify for as much as $14,000 per year. These credits begin to phase-out for individuals earning $75,000/year or at $150,000 for couples filing joint tax returns. And, the credits disappear completely for folks earning $215,000/year (individual) and $290,000/year (married, filing a joint return).
- ACA's most popular provisions will be kept. Folks with preexisting conditions and children up to age 26 will continue to enjoy coverage. But, while someone with a preexisting condition can buy coverage, they must maintain continuous coverage in order to keep their coverage (thus discouraging folks from only buying coverage when they are sickest). By doing so, they'll avoid the 30% penalty for being late/sick entrants.
- Stabilize State Insurance Markets - to support and stabilize state markets, this plan gives states a $100 billion fund, to be spent over a decade, to help lower-income people to afford insurance. This fund could be used to lower out-of-pocket costs, or to promote access to preventive care, etc.
- Medicaid wind-down. While some may highlight this as "the expansion in reverse," this is truly a rollback of the Medicaid expansions under PPACA. This plan gives a per-capita allocation where states are given a set amount for the number of people in each category, including the disabled, elderly, pregnant mothers and childless adults.
- Health Care FSA - before the Affordable Care Act was in place, Employers/Plan Sponsors chose what their annual limit was for the HCFSA that they offered. The ACA capped that at $2,500 and then, indexing it for inflation, allowed it to increase to $2,550 and then $2,600 per employee per year. This plan eliminates that cap and restores Employer choice. Remember, because HCFSAs operate like a self-funded health plan, Employers are "on the hook" for the full annual election on day 1 of the plan year and they assume the risk that the employees will remain for the entire year and pay that election back via pre-tax payroll deductions. So, as 2017 ends and you consider what limit you'd like to have/use in 2018 (beginning 1/1/2018), tread carefully before you allow a $5,000 or $10,000 annual limit. (Use-it-or-lose-it would still seem to apply as would the ability to rollover up to $500 from one year to the next.)
The next steps for this legislation include being marked up in both the House Ways & Means and Energy & Commerce Committees this week. Which means, this could be voted on the House floor very soon.